Prepare for a bright future

Perhaps the number one priority when retiring is to feel comfortable knowing that your savings will last as long as you do. To achieve this, you need to be aware of factors that can influence the value of your savings over time, such as:

Share market movements

Movements in share markets can make a big difference to your retirement savings. If you enjoy strong investment returns in the first few years of retirement, your savings will be more likely to ride market slumps without eating into your capital too much. On the flip side, if market returns are negative early in your retirement, more capital will be needed to pay for ongoing living expenses. This reduces the potential for future growth and your money will run out earlier, even if later returns are good.

Different strategies and products can help minimise or maximise the impact of market fluctuations. The strategies that suit you best will partly depend on how much risk you are comfortable with taking.

How inflation can affect your income

It's likely that your retirement will last 20 years or more (assuming you retire at 65 or younger), so there's a good chance your retirement will be affected by inflation (the increase in prices over time).

Since your money will typically be invested over the long term, inflation can erode the value of the retirement income you receive, making it increasingly difficult to maintain your desired standard of living.

It's worthwhile to think about how inflation may impact your income in the future. Along with other strategies, some assets, like shares and property, may assist in reducing the impact of inflation.

Below is an illustration of how the value of money decreases of over time as a result of inflation.

Sometimes there are surprises in life that we haven't planned for – a child's wedding, unexpected medical expenses, house repairs. There may also be some irregular events that you would like some extra cash for – a winter escape, new decking in the backyard, a set of new golf clubs.

Whatever the event, it's important to decide whether you are likely to need, or want, to be able to withdraw larger sums of money from your superannuation savings when you retire. This flexibility will influence which retirement income options will work for you.

It's important to think about how you would like to have your assets distributed when you pass away. In particular, arranging to protect your family (as well as minimising the taxation on their inheritance) should factor into your retirement planning.

An estate plan will help make your wishes clear. It can also set out how you will be cared for, medically and financially, if you become unable to make your own decisions in the future. When planning your future income needs, the decision of whether to have a lump sum left as an inheritance to your children or others may impact the way your superannuation is invested.

We encourage you to take control of how your estate is distributed as soon as possible. Ask yourself: what you would like to happen tomorrow, if you passed away today?

Your Will

Unfortunately, almost half of all Australians die without having a valid Will, which means they have no say in where their assets go. If that happens, your administrator pays your bills and taxes from your assets and then distributes the remainder based on a standard formula. It's a very good idea to have a valid Will in place to ensure your assets are distributed as you would like.

Superannuation death nominations

By law, superannuation assets are treated separately from the rest of your estate and are not automatically included in the assets that fall under your Will. However, you can often make a 'binding nomination' or select a 'reversionary beneficiary' to ensure that your super is distributed as you prefer after you die.

Your super must be paid to somebody who is your dependent under the law, or to your estate. A dependent may include your spouse or a child. Children over age 18 are not automatically considered to be financially dependent, so they may pay tax on your death benefits.

Understanding and preparing for all these possibilities will ensure that your money lasts as long as your retirement. Our financial planners understand how to prepare for all these events and to structure your retirement income to best suit your needs